Whether it is sales or employee contracts, businesses must navigate through heaps of contracts daily. Irrespective of the company's size or purpose, each contract must be generated with the utmost efficiency. Since it is a crucial part of a successful business, going unprepared is not an option. Organizations need an effective contract management system to get valuable results from their contracts. Moreover, they must ensure that contract generation does not take over their entire business lifecycle.
Adopting and implementing contract lifecycle management software is the best way to optimize the contract management process. The system helps to effectively manage the entire lifecycle of a contract, from initiation through execution, compliance, and renewal. Once CLM software has improved the contract management process, organizations can take steps to shorten the lifecycle time. Keep reading to find out how to utilize CLM to shorten the contract lifecycle.
Contract lifecycle is the time required to process the key stages of a contract, from generation through execution, ongoing management, and renewal/expiry. As a company grows, so do its legal demands and requirements. There are hundreds of contracts to process and execute every day. Hence, it is vital to weigh and alter the contract lifecycle. It will help organizations identify which part of contract management is time-consuming. The primary stages of the contract lifecycle include contract creation, negotiation, review, approval, and execution.
Though the lifecycle of most contracts is the same, the time may vary according to specific factors. For instance, if the contract content is too complicated it might delay the negotiation and review process. Or signing might take a long time if too many approvers are involved.
But irrespective of these denominators, there are steps you can adopt to accelerate the contract lifecycle process. Before we get into that, let us see why contract managers prefer a shorter lifecycle for the contract management process.
The thriving of any business venture is irrevocably dependent upon the successful completion of its contracts. Whether it is vendors, customers, employees, or partners, the contract lays the foundation for the relationship.
Unnecessary and avoidable delays during contract generation might hinder the whole proceedings. For instance, any hold-ups in sales agreements can affect the chances of closing the deal.
That is why contracts need to be executed before businesses lose their momentum. And, when the contract management process is not all time-consuming, there is more room for efficacy. Teams can focus on taking care of their clients, vendors, etc. instead of drawing out contract generation. So apart from faster results, a shorter contract lifecycle also improves business relationships.
Moreover, for businesses with packed calendars, an accelerated contract lifecycle makes it easier to meet deadlines. Consequently, an efficient and shorter lifecycle can reduce the return-on-investment period. And reduced contract lifecycles mean the legal team is free to investigate far more crucial tasks.
Proactive contract lifestyle management can go a long way in improving the efficiency and productivity of an organization. Contract generation is long and time-consuming, especially if all the work is done manually. Just imagine how long it would take to enter contract data individually into a non-automated system.
But fortunately, the CLM software offers an array of digital tools to optimize the end-to-end contract procedure. These features, when used sensibly can save time, cost, and labor. Here is how you can shorten the contract lifecycle time using contract lifecycle management:
Contract lifecycle management software is designed to optimize the contract creation and approval process. The first draft of a contract is hardly ever agreed upon or signed. But users can utilize centralized repositories, clause libraries, and contract templates to create contracts and kick-start the negotiation process.
With CMS (Content Management Systems), legal and other teams will not have to create every contract from scratch or go through hundreds of files for necessary information. With these features, you can automatically fill content for contract generation. There is no need for manual entry or errors. Automated data entry means accurate contract data across the entire contract management platform. This way, you can save time on low-scale administrative tasks.
The contract management software also comes with automated tracking. It enables users to keep track of the changes during contract negotiation. This visual contract timeline helps to get to the finalized version without much manual error or confusion.
Another method to save time during contract generation is using standardized contracts as far as possible. Using standardized contracts for NDA (Non-Disclosure Agreement), employment, etc. can shorten the contract lifecycle. Also, bring consistency to your contract language. If you have a pre-established contract language, producing quality contracts is easier. And it will reduce the whole contracting lifecycle time too. Also, using simple language can accelerate the contract review and approval process.
Automated contract management systems provide a refined process to upload, create, share, and store contracts. Both legal and non-legal teams can handle contracts at scale. At every stage of the contract life cycle, CMS offers tools & functions to automate different tasks. An efficient automation system will deliver results without sacrificing flexibility.
The automation process starts with using templates offered by CMS to generate contracts. CMS also includes tools to record and retrieve contract metadata like names, dates, addresses, etc. It means any data contract-related data entered into the software is easily trackable and retrievable. CMS also enables various stakeholders to collaborate in real-time. Numerous counterparties can negotiate the contract within the contract management platform. They will not have to worry about audit trails or different versions. It reduces the overall scope of mistakes in the contract negotiation and approval process.
Even low-value work associated with contract management like scanning, sharing, and duplication can be carried out in no time using contract management software. Also, CLM systems come with automated notifications for key dates and deadlines. It helps to execute contracts faster and shorten the contract cycle time.
Legal and other teams can rely on contract management software to create an efficient contract workflow. With customized contract workflows you can steer the whole contract management process without supervising each step. It simplifies and accelerates the tasks that make up the contract management process.
Once you have established an operational contract workflow, it is pretty easy to replicate this system for other workflows. Eventually, these repeatable workflows can save time and perpetuate efficiency. Also, the workflows offer end-to-end visibility for the contract management process. So, at any given time, users can keep track of all contract-related activities. As a result, there is no chance of unnecessary delays or incompetency.
Legal does not need to review and approve every contract that goes out. These customized workflows come with definite approvers and signatories with specified roles. With approval rights and e-signature workflows, the CMS can be used to speed up the approval process.
Using CLM, an organization can decide upon approvers and counterparties to sign off the contracts. It means authorized personnel can quickly approve and execute the contracts without cause for friction. In an expanding business, having numerous e-signature workflows and approvers can speed up the whole contract execution process.
The daily volume of routine contracts can curb the growth of any business. With automation and customized workflows, departments can generate, negotiate, and execute contracts without significant input from the legal team. These are known as self-service contracts.
They are quite helpful for large businesses, where sales or HR teams handle a large number of contracts every day. The departments can create standardized employee contracts or partnership contracts without having to wait around for legal personnel. Using pre-approved templates and clauses, any team can start the contract management process. When CLM is not solely dependent on the legal team, the contract life cycle time is reduced substantially.
Contract management software enables businesses to generate contracts that take care of themselves. These automated contract management systems do not require human input at every turn. Apart from saving countless hours, automated contracts also empower legal and other teams to focus on high-value tasks such as sales, acquisition, etc. Consequently, the productivity and efficiency of a company are improved significantly.
We already know that CLM is vital for an optimized contract management process. But with proper implementation, CLM can do much more for your business. They can empower users to stay up-to-speed on contract generation, review, and execution. By following the above steps, organizations can enjoy a shorter contract lifecycle without cutting corners or sacrificing quality. In the long term, improved contract performance means increased productivity, efficiency, and revenue.
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